Collection Agency...What Is Typical?

I've never had to deal with one, but my almost 21-year old nephew who is living with me temporarily soon will be. I have seen him throw two unpaid bills in the trash as if he thinks nothing bad will happen. I know one has gone to collection already and the other one will within the next 30-60 days. Both of these bills are approx $460 total. Is it likely that his wages will be garnished? If yes, how soon could that happen? What other downsides should I look forward to hearing about?

The collection agency will keep sending him letters and calling if they have his phone number, they will send him a letter agreeing to settle for less than he owes (but more than they paid for the debt).

They may eventually give up but this will stay on his credit report for seven years.

From what I know, only government agencies (child support, tickets, taxes) can garnish unless they take the person to court and win a lawsuit. Smack your nephew upside his good-for-nothing head and tell him to pay the bills. With his almost non-existent credit history, having two debts go to collections will cost him MUCH more in the long run for many years to come

Lets not forget in the future with bad credit he will have to almost always put deposit down when starting utilities such as electric cable and such. He will be paying more for car insurance. Higher interest rates for car and home loans. That is if he can get one at all. I think employers are starting to pull credit reports on potential employees bad credit equals no job.

Once someone agrees to it - it is effectively a contract with the agency. Same reason that if a collection agency is calling on a bogus or incorrect unpaid bill and you say you owe it - you are on the hook and the time they can try and collect is reset. Collection agencies try and call a lot with collections that are nearing the time limit to collect so they can try and reset the time to collect.

This is also the same reason collection agencies try to call anyone with the same last name and lives nearby. They hope it is a relative and if they can get the relative to say they will pay it...

I have no idea what effect it will have on your nephew but I've had several employees who have managed to drag my company and myself into their collection agency melee. If he has used your address on any of these bills, you can expect your phone to ring incessantly and a flurry of mail. One CA, who I asked not to call my business, decided to call my home phone every 30-45 minutes from 7:00A - 10:00P for months looking for an employee who I hadn't employed in over three years. They will attempt to make your life a living hell and has been mentioned, coerce you into paying. After getting pissed, I decided get an extra GV# and play along....some of the crap they say and threats they make are priceless. They must have figured it out since one day the calls stopped as mysteriously as they started. --Zach

Good way to start adulthood. "Placed for Collection" on a credit report means his credit is screwed for at least 7 years. If he gets lucky and someone extends him credit, he'll pay huge interest rates.

Worst thing is many companies now pull credit reports during their screening process for potential employees. Sucks to not get your dream job because you walked away from $480 in bills.

They can't garnish his wages unless they decide to take him to court and sue. All depends if the lender wants to do it. I've got garnishment notices for some of my employees for just a few hundred dollars.

Getting garnished for that little amount of money is nothing - having screwed credit really messes with your life.

Not sure I understand the meaning of this. I won't agree to pay his bills. How could I possibly be held legally responsible just because I allow him to sleep here? Because I answer their phone call?

You can not be held legally responsible (unless you were foolish enough to agree), however, they will call you, even after he leaves your residence. Tell your nephew that under no circumstances may he use your address or home phone number.

One of my kids who was not even living with me at the time, gave a collection agency my phone number. It was a bear to finally get rid of them!

Not saying that your nephew shouldn't pay his just debts (he should, and frankly, if I had a wayward nephew staying with me, I would not shelter him if he was flat-out refusing to pay his debts), however, these collection agencies are almost without exception a sleazy bunch of barely-legal weasels with no concern over right and wrong.--Deeds, not words

Since he is living with you - a collection agency will try and get you to agree to pay his bills if you answer their phone call. If you do this - then you are on the hook.

If you mean "agree to pay his bills" because some guy called and asked you to, that's 100% bullshit.

Unless they have your signature on something, you're not on the hook. Keep in mind they may try to bully you into thinking you are obligated to follow through on a verbal agreement but there is no legal meat behind it. They can't make a third party pay based solely on what was said during phone call, nor is there a penalty for not keeping your word.

To the OP: It sounds to me that you are creating a problem where one does not need to be. Nephew is staying with you "temporarily," so ask him not to use your address or phone number for his personal business and there will be no reason for you to be involved to begin with. Why does anyone need to know he is crashing at your place? If he is uncooperative and his creditors start chasing you...oh well. That's the price you pay for taking in a deadbeat.

Offer to pay for a PO box. Some private vendors like the UPS Store have an actual street address so no one even knows it's just a mail drop. It's cheap insurance for keeping his hassles from becoming your hassles.

Tell him to pay the bills BEFORE he moves in. It will be a good object lesson for him.

As for talking to the collection agencies, that is the kiss of death. They are well-practiced in dealing with deadbeats and know every trick in the book. If you have to ask questions here about how to deal with this issue, you're a prime victim for their tactics (no offense intended) They'll have you for lunch.

Spend some time reading the Clark Howard material. He is an acknowledged expert. Also, some more information here:

Once someone agrees to it - it is effectively a contract with the agency. Same reason that if a collection agency is calling on a bogus or incorrect unpaid bill and you say you owe it - you are on the hook and the time they can try and collect is reset.

the debt cannot be reset/re-aged because of something verbal. sending an actual payment is what consummates the deal. Unless this has changed in the last few years.--| map your city |

One collection agency will phone for a while, usually 3-4 months of phone calls, then they sell the delinquent account to another who will do the same sort of stuff. They don't even care to answer the calls when you pick up the line, they just use the auto dialed phone ringer to disrupt your life.They don't care that you personally are not responsible for the debt, they just make it painful and will continue to make the calls hoping you will pressure the debtor.

Unless Clark Howard is being paranoid but the collection agency will have you recorded identifying yourself, the debit and then your admissions that you owe it. Clark has said for the last couple of years that simply saying you owe the debit is enough to reset it (it could be a state by state thing as well).--Brian

For several weeks I would come home home from work and there was a message for me from a collection agency looking for a relative. I'm not sure how they found me; I'm guessing they just called everyone in the area with the same last name and hoped for the best. My last name is somewhat uncommon enough to make them think they might get lucky.

I blew it off for a while until it started getting on my nerves. I broke my silence and purposely called back after hours when I knew they would be closed because I did not want to actually speak to them. I left a voicemail and said that I would pass the message along to my relative on the condition that they never call or contact me again. If I got so much as one call or piece of mail, I would fix it so they will spend countless hours chasing false leads and never find who they are looking for.

I never heard from or of them again. And I have no idea if my relative ever cleared their debt .

For several weeks I would come home home from work and there was a message for me from a collection agency looking for a relative. I'm not sure how they found me; I'm guessing they just called everyone in the area with the same last name and hoped for the best. My last name is somewhat uncommon enough to make them think they might get lucky.

I blew it off for a while until it started getting on my nerves. I broke my silence and purposely called back after hours when I knew they would be closed because I did not want to actually speak to them. I left a voicemail and said that I would pass the message along to my relative on the condition that they never call or contact me again. If I got so much as one call or piece of mail, I would fix it so they will spend countless hours chasing false leads and never find who they are looking for.

I never heard from or of them again. And I have no idea if my relative ever cleared their debt .

The FDCPA requires them to stop contacting you if requested. I have a lawsuit going right now with a collection agency who failed to stop when asked. They drag the process out as much as possible knowing they'll lose and have to pay eventually. We're donating all the proceeds to Big Brothers Big Sisters when they finally settle.--What we're saying today is that you're either part of the solution or you're part of the problem. - E. Cleaver 1968

Several years ago Blockbuster debited a closed checking account for some DVDs they stated I did not return. As I had closed that account, the bank charged me around $60 in late fees. I did not realize this as I had moved and they turned it over to a collection company. I did not handle this correctly and told the collection company I would follow up with BB as I felt I did not owe them anything. A month or two went by and the collection company turned it over to an attorney who filed suit in big boys court (not small claims). As I had a contract with the bank, I now owed around $400 in collection fees. I filed an Answer and we went to mediation. They were now asking for $600 and told them I'd drag the bank into it and spend all day in court. They refused and would not take less then $600. I figured I had little to loose by rolling the dice in court. We went back the following money and I did as I stated. I ended up loosing a owing $650... which I paid right away and the collection company agreed to file the correct paperwork with the court. It never showed up on a credit report... probably as I agreed to pay very quickly.

Your nephew does have a contract with the company and it probably does state that collection fees can be added onto the debt. In my state a company can garnish wages with a judgement but I don't think this is very typical (this is why I agreed to pay in the end) and it basically takes wages down to minimum wage. It can also affect someone's credit and cost them a _lot_ more in the long run. It might be difficult to obtain a checking account, it might be difficult to obtain a debit or credit card. Credit card rates might be higher, auto insurance might be higher, some employers won't hire you if they run a credit report (I work as a claims adjuster and they _always_ run a credit report).

You never know what a collection company will do. I'd recommend that he research this and send the proper letters to have the collection company send the proper documentation or drop the case. It's needs to be done now instead of later. It might already be too late. Sticking your head in the sand almost never makes these issues go away. They only get worse.

The FDCPA requires them to stop contacting you if requested. I have a lawsuit going right now with a collection agency who failed to stop when asked. They drag the process out as much as possible knowing they'll lose and have to pay eventually. We're donating all the proceeds to Big Brothers Big Sisters when they finally settle.

I'm filing in small claims court this week over an issue like this. A collection company called by mobile phone twice at 6:45am with a auto dial system. It's strict liability so I just need to show that they called before 9:00am. I gave them the choice to speak to me about it for up to $2,000 or I'd file for $4,000 (2 calls before 9am and 2 auto dialed calls that did not release).

The FDCPA requires them to stop contacting you if requested. I have a lawsuit going right now with a collection agency who failed to stop when asked. They drag the process out as much as possible knowing they'll lose and have to pay eventually. We're donating all the proceeds to Big Brothers Big Sisters when they finally settle.

I'm filing in small claims court this week over an issue like this. A collection company called by mobile phone twice at 6:45am with a auto dial system. It's strict liability so I just need to show that they called before 9:00am. I gave them the choice to speak to me about it for up to $2,000 or I'd file for $4,000 (2 calls before 9am and 2 auto dialed calls that did not release).

Yea it's $1,000 max per incident. We started the lawsuit on 10/17/2011 and they are still dragging it out. We hope to have it wrapped up by this Summer. It's a long painful process but that's the only way to teach them a lesson.--What we're saying today is that you're either part of the solution or you're part of the problem. - E. Cleaver 1968

Yea it's $1,000 max per incident. We started the lawsuit on 10/17/2011 and they are still dragging it out. We hope to have it wrapped up by this Summer. It's a long painful process but that's the only way to teach them a lesson.

Good for you. That's the only thing that will stop them is a hit to their bank account. Wish we had those regulations up here.

The thing that I understand about collection agencies, they buy a bundle of outstanding bills from credits for pennies on the dollars.So my couple hundred dollar debt, had only cost them may 30 to 50 dollars to pick up. If I paid it, the person bugging me would have gotten a portion of that, and the rest goes to the agency.Yes, the person you talk to one the phone is paid on commissions. Hence why they are so eager to talk to you and to get you to cut an e-check right then and there.

And like others have said, they have a 7 year window to collect on that debt. Though sometimes it will circulate for longer then that and agencies will still try to collect on it.--Is a person a failure for doing nothing? Or is he a failure for trying, and not succeeding at what he is attempting to do? What did you fail at today?.

And like others have said, they have a 7 year window to collect on that debt. Though sometimes it will circulate for longer then that and agencies will still try to collect on it.

Actually they have a 7 year window to put it on your credit. There is a statue of limitations on how long they can file a lawsuit against you over the debt as well that varies by state. The fun part is they can bug you for the rest of your life on the debt. There's nothing preventing them from trying to collect the debt 20 or 30 years from now.

I'd like to point out that there are generally two types of collection agencies out there.

The ones I consider legitimate are acting as agents of the lender - basically just the lender outsourcing their collections and they almost always follow the rules. They are the only ones that can sue you and so forth. They try to collect for whatever time period the lender wants them to then either sue or charge off the debt. Rarely does that process go on past 9-12 months. As an agent of the lender, they can negotiate payments, lower the amount owed if they wish, and you actually can sometimes negotiate with them to remove the negative entry from your credit report if you pay the debt.

The snakes are the ones that purchase charged off debt from the lenders - at that point the lender has charged off the debt and they are done with it. These are the ones that break the rules about when and where they can call you, often chase the debt way past any statute of limitations for sueing, etc. They have -NO- legal standing to do anything to you - they can't put anything on your credit report, they can't sue you, -nothing- despite what they may claim.

The snakes can't remove the charged off entry from your credit report even though many will promise, even in writing, to do so. Only the original lender can do that and once they charge off a debt, they generally won't. (and legally can't take any monies from you)